CAS rate freeze worries Star India

NEW DELHI: Star India, part of Rupert Murdoch's pan-Asian venture, is going in for a flanking strategy to couch its bottomline - healthy though it looks - from being affected by regulatory impediments.

Though openly it's not being admitted, the freezing of cable subscription prices by the Telecom Regulatory Authority of India (Trai) in January is worrying broadcasters, including Star India.

"This freeze on prices cannot go on forever. The regulator has to come up with some recommendation on the issue soon," Star India CEO Peter Mukerjea told

In a bid to neutralise the effect of price freeze partially, Star India has hit upon a plan of signing long-term deals with multi-system operators (MSOs) and cable operators.

Pointing out that the actual plan hasn't yet taken off, Mukerjea said, "The CAS imbroglio has forced us to think of other initiatives. We are looking at an idea whether signing three-year deals with the cable guys would make more sense. This can then also address the issue of the almost daily problems that crop up between us as a broadcaster and the cable guys."

Of course, if Star India signs long-term deals with the players in the cable industry, then an annual increase in subscription rates would be factored in, which can be in the region of five per cent.

Would Star India take legal recourse if Trai continues to dither on the CAS issue and the price freeze continues? Though Mukerjea could not be tempted to get drawn into this part of the controversial CAS issue, after speaking to industry people gets a feeling that an opinion is building up towards putting some pressure on Trai on pricing. It has to be seen whether such a step, if taken, is done individually or collectively.

Though Mukerjea did not comment on whether this price freeze of cable rates has effected the mop up of subscription revenue by Star India, experts feel that several months of the Trai-mandated freeze would effect the numbers as Star Group heads towards a financial year end on 30 June.

"Without releasing India-specific estimates, Hong Kong-based Media Partners Asia (MPA) estimates show that for the first half of (Star's) FY 2004, distribution gains were impressive year-on-year. But since the Trai rate freeze in January, I think distribution revenue gains have been impacted," said media analyst Vivek Couto of the MPA.

According to MPA, which tracks performances of media companies across Asia, Star Group's consolidated (excluding ESPN STAR Sports) income included about $75 million in subscription revenue in India for FY 2003.

Meanwhile, Star India is also planning to increase its growth rate by broadbasing its strategy to mop up advertising revenue.

The idea, as Mukerjea pointed out, is to work towards a system where over 50 per cent of the ad inventory could be sold towards the beginning of the year so as to ensure not only a steady income but also insulate the business from any mid-term upheavals that the industry or the economy may witness.

Easier said than done because for such a model to work here in India, as it does in other developed western markets, Star India needs to have many others things also lined up in advance, including acquisition of movies and finalising new programmes.

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